Shell Sees Growing Confidence in Canadian LNG Prospects Amid Middle East Unrest

Shell CEO Wael Sawan says there is growing confidence in Canadian LNG prospects due to improved signals from Ottawa and British Columbia. He believes this will boost the odds of a green light for an expansion at LNG Canada.

The confidence comes after Shell unveiled a $22-billion takeover bid for ARC Resources Ltd., its largest since buying BG Group PLC in 2015. The deal is subject to shareholder and regulatory approvals, valuing ARC at around $32.80 per share, roughly a 27% premium to its closing price Friday.

Sawan says the acquisition will allow Shell to capture higher prices for ARC's low-cost natural gas via its trading arm and LNG export network. He also notes that recent events in the Middle East have raised the investment case for Canada, with many customers looking for diversified supplies.

Shell's interest in ARC dates back two to three years, but it held off making a move until its own share price improved. Sawan believes Canadian LNG projects benefit from structurally lower costs due to weaker natural gas prices in Western Canada and shorter shipping distances to Asia.